KARACHI: Collector of Customs Adjudication, Ahmed Mujtaba Memon, has issued Order-in-Original (ONO) against M/s Al-Mawadah Textile in evasion of additional sales tax of Rs 18.33 million on account of mis-use of SRO1125(I)/2011 and short levy of advance income tax on commercial import of fabric consignments worth Rs 388.83 million.
The case was constituted by MCC-Appraisement (West) and made contravention report against the importer M/s Al-Mawadah Textile.
According to details, the MCC-Appraisement (West) vide Contravention Report No. ITC/04/2014-IV are certain that unscrupulous commercial importers have attempted to mis-use the concessionary rate of Sales Tax provided in SRO1125(I)/2011 by obtaining Sales Tax registration from Inland Revenue under the category of manufactures despite the fact that those importers did not have manufacturing facility of their own.
Whereas, according to condition VII of SRO1125(I)/2011 amended vide SRO154(I)/2013, SRO504(I)/2013 and SRO898(I)/2013, sales tax is chargeable on import of fabric at concessionary rate if imported by registered manufacturers and commercial importers of different slabs.
As per above mentioned condition of said notifications, registered manufacturers listed in the Active Taxpayers’ List (ATL) pay sales tax at import stage @3per cent on fabric imported for in-house consumption and Income Tax @2per cent over and above the concessionary rate of 3per cent and Income Tax @3per cent.
Thus, importer M/s Al-Mawadah Textile by clearing the under reference consignments of fabric evaded leviable additional sales tax amounting to Rs8921421 and advance income tax amounting to Rs9416557 and thus committed offence of mis-declaration and fiscal fraud in terms of Section 32(1)(2), 32-A, 79(1)(b) and 80 of the Customs Act, 1969, Section 6,11 and 36 read with Section 7A of the Sales Tax Act, 1990 and Chapter X of the Sales Tax Procedure Rules, 2007 vide SRO480(I)/2007 read with SRO1125(I)/2011 amended vide SRO154(I)/2013, SRO504(I)/2013, SRO898(I)2013 and SRO154(I)/2013 further read with Section 148 and 161(2) of the Income Tax Ordinance 2001 punishable under clauses 14 and 14 A of the Section 156(I) of the Customs Act, 1969 read with Section 33, 34 and 36 of the Sales Tax 1990 and Section 148 of the Income Tax Ordinance. The total import value of the consignments is Rs388831445 and payment of duty/taxes leviable thereon which comes to Rs18337978 as mentioned in Contravention Report.
In the light of the above reported facts, the importer M/s Al-Mawadah Textile was called upon to show-cause as to why short paid amount of Rs18337978 may not be recovered from them and penal action warranted under the aforementioned provisions of law may not be taken against them.
Scrutiny of record revealed that hearings of the case were conducted on 16-09-2014, 18-12-2014, 26-12-2014 and 01-01-2015 and no one appeared for hearing nor submitted written reply to the Show-Cause Notice.
In the judgment, the Collector of Customs Adjudication Ahmed Mujtaba Memon convinced that the charges leveled in the SCN stand established and ordered the importer M/s Al-Mawadah Textile to immediately deposit the short paid amount of Rs18337978 (additional sales tax amounting to Rs8921421 and advance income tax amounting to Rs9416557 in government treasury under Section 32(2) of the Customs Act, 1969.
The Collector of Customs Adjudication has also imposed a penalty of Rs1,500,000 under clauses (14) of Section 156(I) of the Customs Act, 1969 for violation of Section 32(1) ibid, on the importer M/s Mawadah Textile.
